Healthy Skepticism Library item: 8075

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

End Big Pharma payoffs
The Star-Ledger (New Jersey) 2007 Jan 27
http://www.nj.com/opinion/ledger/editorials/index.ssf?/base/news-1/1169876241116170.xml&coll=1

Full text:

Why would a drug company pay $40 million, $90 million or more to its generic competition? Why not if the payoff keeps a cheaper generic version of a brand-name drug off the shelves for a few extra months? After all, if the brand name brings in $1 million a day in revenue — or more, as some drugs do — the payoff is peanuts.

The deal is lucrative for both parties but a bad bargain for the public because it keeps drug prices higher for longer than they need be. And since the courts have refused to label these deals antitrust actions, Congress must respond with a law to make such payoffs illegal.

The “pay to delay” deals are an anti-consumer twist on a law that was meant to help the public. The law was supposed to encourage generics to negotiate settlements that would bring them to market sooner, but the result has been a delayed market entry. Typically, the price of the first generic on the market is 20 percent lower than the brand-name price, and generic competition can reduce prices as much as 80 percent.

Increasingly, however, the industry’s idea of a settlement is to pay off the generics to kill the challenges. The Federal Trade Commission says Schering-Plough of Kenilworth paid $90 million to two generic companies positioned to market a cheaper version of a Schering blood pressure drug. Bristol Myers Squibb agreed to pay $40 million to a Canadian generic to delay a knockoff of the blockbuster blood thinner Plavix, a deal that eventually fell through and led to regime change at Bristol Myers Squibb.

With many of the biggest-selling drugs scheduled to come off patent in the next four to five years, the FTC expects the payoffs to be bigger and more common.

If so, consumers, employee health plans and government programs like Medicaid and the new Medicare prescription program will pay billions more than they would otherwise for medications.

The FTC, taking an uncharacteristic stand against the pharmaceutical industry, is pushing for a bill that would make the payoffs illegal.

The pharmaceutical industry, including those drug companies that bring jobs and revenue to this state, is under pressure. It may be time to take a hard overall look at patents as they apply to pharmaceuticals. Perhaps some changes should be made. But the payoffs fall somewhere between bribery and extortion. They are wrong, and they hurt the public pocketbook. The New Jersey congressional delegation should join the rest of Congress and ban them.